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Lawsuit alleges Meta went around Apple privacy settings

Yahoo Finance’s Daniel Howley joins the Live show to discuss a lawsuit filed against Meta that alleges the company of skirting Apple’s new privacy restrictions.

Video Transcript

BRAD SMITH: Everyone, a messy time, though, for Meta with the social media giant facing up against lawsuits that accuse it of skirting Apple's new privacy restrictions. Meanwhile, the company accused of quiet firing, sending signals to staffers by reorganizing departments and giving employees a limited time to find new roles. For a look at all of this, we've got Yahoo Finance's Dan Howley with more. Dan, all right, first, just break down what Meta has been doing kind of internally for us that we laid out at the latter half of that.

DAN HOWLEY: Yeah, so this is a proposed class action suit. And basically, what it says is essentially something that I've noticed, not necessarily the tracking part, but the use of a secondary browser. So, essentially what these folks are saying is that when you use something like Facebook or Instagram, which is what I have been noticing, when you go to open up a link to, say, an outside article or something along those lines, it doesn't pop open your Chrome browser or your Safari browser, but instead, what it does in iOS is open up its own browser and take you to the website.

Now, that's where the rub is because Meta, Facebook, is using its own browser to access these third party sites. Now, if you say that you don't want Meta to track you across sites, that means that you wouldn't want them, obviously, looking at the fact that you maybe went to-- I don't know-- a BuzzFeed quiz, which is what I've been frequently doing on Instagram. But what it does is it supposedly injects its own code into those sites when you visit them to track what you're then doing on those sites. And it's able to do that because it's using its own browser.

Now, there's discussion on whether or not this actually skirts Apple's own policies, as well as users, which is because, obviously, if you're choosing not to be tracked, you don't want Meta following you whatever browser you use. So that's really where this conversation is going. And so this all comes down to that security update that Apple had made, that app tracking transparency feature that they had introduced in iOS 14.

And essentially, what that says is, apps aren't allowed to track users, what they do on other websites, or even in other apps, if they ask the app not to track them. If they say they can be tracked, then that's fine. But this has been a big problem for Meta. It cost them approximately $10 billion last year. And so they're looking for ways to get around this. And apparently, this is seemingly one of them, at least as far as the class action or proposed class action suit is concerned.

JULIE HYMAN: I just want to know if they really did accurately guess your age based on what you get at Starbucks in the BuzzFeed quiz. Dan, bottom line here, what do these lawsuits mean for Meta and their profitability?

DAN HOWLEY: Yeah, I'm just going to say pumpkin spice latte, and I don't care how basic that is. It's delicious. I just-- I think when it comes to Meta, this is their-- been their big bear, right? This is the issue that they've been staring down for some time. And their stock price has been hit as a result of the iOS privacy changes. Prior to the introduction of the changes, they took out full page ads in major national newspapers. They were doing a full court press trying to get everyone on board with them.

But Apple runs iOS, and so they made those changes. And so we've seen this, obviously, big hit to the bottom line. As I said, $10 billion last year. Going forward, obviously, the issue is now we're seeing advertising sales go down. And then as a result, that's also hurting Meta, in addition to these security changes.

Now, interestingly, while Meta has been hurt, Google has not been hurt as bad. And the reason there is because they're gathering data that people type into the Google search engine. And that's fine because that's through the app itself, and they're collecting it through the app itself. So it's not as though Meta is not getting any signals on its own. It just can't get the kind of data that users may-- advertisers may be interested in about users.

You don't go looking for something. You don't search the same way in Facebook or Instagram as you do on Google. And Google, obviously, that's the kind of information that advertisers really kind of want. So this is going to continue to hurt their bottom line going forward.

JULIE HYMAN: All right, well, really interesting here and the latest twist in the whole Apple tracking saga.